FARGO, N.D. (KVRR) – Concerns are rising among student loan borrowers over the uncertain future of their loans. This apprehension follows the recent suspension of the "SAVE" plan, leaving many to wonder about the impacts of potential policy changes. At present, borrowers can no longer apply for income-driven repayment plans on their federal student loans.
With over 42 million people across the United States burdened by federal student loan debt—and the total balance nearing $2 trillion—the stakes are high. Financial advisors like Ryan Keel, owner of CollegeSmart and College Planning Specialist, urge borrowers to apply for financial aid and to keep track of their loan documents closely. "If they go away—which I think is kind of a long shot—there is some talk of it. It would put a lot of strain on parents and families paying. Colleges might have to step up and offer more financial aid directly from them," Keel suggests.
Adding to the confusion, borrowers pursuing Public Service Loan Forgiveness (PSLF) are increasingly anxious about the program's future as the Trump administration proceeds with sweeping changes to the student loan system. Higher education expert Mark Kantrowitz notes, "There's a lot of panicking by PSLF borrowers due to the uncertainty." Under the PSLF program, initiated by President George W. Bush in 2007, certain non-profit and government employees can have their federal student loans canceled after making 10 years of payments.
For now, the Trump administration has removed income-driven repayment (IDR) plan applications from the U.S. Department of Education's website, disrupting what many borrowers rely on for manageable loan payments. This administrative change stems from a recent 8th Circuit Court of Appeals ruling, which blocked the Biden administration’s new IDR plan, SAVE, along with the loan forgiveness component under other IDR plans. Fortunately, this ruling does not impact any provisions of PSLF.
While the Biden administration's forbearance policies have paused payments for those enrolled under PSLF, borrowers in this forbearance do not receive credit toward their required 120 payments for loan forgiveness, unlike the pandemic-era pause. The situation remains opaque as borrowers grapple with unclear timelines for when they will receive much-needed clarity.
Experts like Kantrowitz recommend maintaining accurate records during this transitional time. "It would also be a good idea to create a spreadsheet showing all of the qualifying payments so they have their own count," he advises. This proactive approach is especially important as the Educational Department is currently tweaking applications to comply with the recent court ruling, with plans to resume functionality likely months away.
An important opportunity exists for borrowers called the Buyback possibility, which permits individuals to pay for certain months previously considered non-qualifying, provided they bring their total to 120 qualifying payments. Betsy Mayotte, president of The Institute of Student Loan Advisors, highlights this as a viable option for borrowers who may have previously spent time in forbearance or deferment.
"The benefit is likely to be eliminated by the Trump administration," warns Kantrowitz, urging borrowers nearing the ten-year threshold to submit their buyback requests as soon as possible. The Buyback program can effectively help those who have encountered payment inaccuracies under the PSLF.
While the challenges loom, borrowers are advised to use available resources like the PSLF help tool, which assists individuals in identifying qualifying employers and accessing required certification forms. Regularly filling these forms can help maintain clarity and navigate the complex environment surrounding student loans. Reporting on this situation reflects the growing anxiety among borrowers as they face the uncertainty of their financial futures.
Every step taken now is significant, particularly for those pursuing forgiveness under the PSLF program, who must remain vigilant about their records and options. Continuing to follow developments from the Department of Education is also advised, as it shapes the future of student loan borrowers and affects financial stability for millions across the country.